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Question 17 Consider the following schedule. If the potential GDP is at 12.0, what can you conclude about price levels and the unemployment rate? Current Price Level Real GDP-quantity demanded per trillion Real GDP-quantity supplied per trillion 120 115 110 100 17.0 15.0 13.0 10.0 8.0 15.0 12.0 11.2 The economy is experiencing rising price levels and has a low unemployment rate because it is operating above the potential GDP O The economy has stable price levels and low unemployment because it is operating above the potential GDP. O The economy has high unemployment but experiences stable price levels because the economy operates below the potential GDP.

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Answer #1

It is given that the potential GDP is 12 The economy is at equilibrium where real GDP quantity demanded is equal to real GDP

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Answer #2
the economy has high unemployment but experiences stable price levels because the economy operates below the potential gdp
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